design portfolio: r2a - due diligence engineers
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Marketing Strategy
advertiSing Online & Offline
Branding identity
trade ShOwS & eventS
R2A Due Diligence engineeRs
Design poRtfolio
wheRe mARketing mAkes gooD business sense.
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2013 Print
ENGINEERING DUE DILIGENCE
DUE DILIG
ENCE EN
GIN
EERS
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2013 Print
Are you responsible for technical risk issues?
Do you need to communicate complex issues to non technical decision makers?
Like to manage project, safety, financial and environmental outcomes better?
If so, then the R2A 2 day short course is for you.
As a responsible officer in an organisation, your role is to ensure that technical risks are adequately managed.
The R2A Engineering Due Diligence Course will help you to better manage multiple stakeholders and overall project outcomes.
The course is suited for CEOs, GMs and COOs and their risk and compliance staff.
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ENGINEERING DUE DILIGENCE COURSE
COURSE AIMThe aim of the course is to ensure that, in complex technological and essential service organisations, the laws of nature are managed to the satisfaction of the laws of man. This includes financial, project, safety and environmental outcomes.
COURSE outlineThe course will provide participants with the understanding, skills and tools to enable all significant technological risk issues and proposed controls to be appropriately escalated to senior decision makers in ways that those decision makers can understand. It will enable shareholders and taxpayers to transparently see why expenditure is required. And, in the worst case scenarios, satisfy the courts if it all comes to grief.
WHO SHOULD ATTEND?CEOs, GMs and COOs and their risk and compliance staff.
DATESBrisbane 26 –27 February
COURSE OBJECTIVESAt the end of the course, participants will be able to -
» Understand what constitutes due diligence under Australian High Court case (common) law
» Understand the requirements of the Work Health and Safety (WHS) legislation to positively demonstrate due diligence
» Understand the mismatch between business risk, project risk and safety risk paradigms
» Choose when to avoid HazOps and FMECAs and other detailed bottom up risk assessment processes
» Understand that the use of target (tolerable) levels of safety risk is logically in error and indefensible under Australian law
» Decide which risk management sign off paradigms are appropriate to their organisation.
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ENGINEERING DUE DILIGENCE COURSE | EVALUATION
NAME (OPTIONAL) ORGANISATION (OPTIONAL)
What were the strengths of the short course?
What were the weaknesses of the short course?
Do you have any further Professional Development needs or ideas for new short courses?
Do you have any projects that R2A could assist with?
thankyou
LEVEL OF DIFFICULTY TOO EASY APPROPRIATE TOO DIFFICULT
AMOUNT OF CONTENT TOO EASY APPROPRIATE TOO DIFFICULT
PACING TOO EASY APPROPRIATE TOO DIFFICULT
PRACTICAL CONTENT TOO EASY APPROPRIATE TOO DIFFICULT
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2013 overview and R2A Book Launch
» Presentation followed by drinks and canapés » Catch up with Industry Colleagues » Book offer - 10% off the 9th Edition Text. (RRP $285)
RSVP 31ST JanuaryGaye Francis - 1300 772 333
PRESENTATIONRICHARD ROBINSON2013 Overview for Risk Management and Due Diligence
February 7th 20133pm - 5pmPop Restaurant (Upstairs Bar) 68 Hardware Lane
INTRODUCTION
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SAFETY DUE DILIGENCE Recognised Good Practice Whitepaper 1DUE DILIGENCE ENGINEERS
SAFETY DUE DILIGENCE.RECOGNISED GOOD PRACTICE.How To Engineer Safety Due Diligence Under The Provisions of The Model WHS Act.
SAFETY DUE DILIGENCE Recognised Good Practice Whitepaper 3DUE DILIGENCE ENGINEERS
SUMMARY
In reality, to be safe means to be free from harm. In court, safe means that,
despite something apparently unsafe having happened, due diligence
has been demonstrated. In engineering terms this means that to be safe
requires managing the laws of nature in a way that is consistent with the laws of
man and in that order.
At R2A we have developed a routinely successful process to positively
demonstrate safety due diligence consistent with the requirements of the
model Work Health and Safety (WHS) legislation that has commenced in
all Australian jurisdictions except, at the time of writing, Western Australia
and Victoria.
The R2A approach adopts a precautionary common law formulation for the
demonstration of due diligence as a defence against negligence namely:
• Acompletenessargumentastowhyallcrediblecriticalsafetyissuestoall
affectedpartieshavebeenidentified;
• Anargumentastowhyallpracticableprecautionsforeachcredible
criticalissuehasbeenidentified;
• Anargumentastowhichpracticableprecautionsarereasonable
consistentwithdecisionsoftheHighCourtofAustralia;and
• Theestablishmentofasafetyqualityassuranceregimetoconfirmthatall
reasonable practicable precautions are maintained on an ongoing basis.
This approach does not mean that bad things can’t happen. It means
(assuming the activity is not prohibitively dangerous such that it should
not occur at all) that all reasonable practicable precautions for all
foreseeable, critical hazards to all affected parties are in place, based on the
balanceofthesignificanceoftheriskvstheeffortrequiredtoreduceit.
This also means that risks should be eliminated or minimised so far as
reasonably practicable.
Such a position, based around the test of reasonably practicability arguable
at a common law balance (the 50:50 tipping point), should provide superior
safety outcomes for all whilst offering the best protection against criminal
chargesforresponsibleofficersundertheprovisionsofthemodelWHSAct.
R2A have provided this paper as a summary of the key requirements of
the model WHS Act. We outline why your traditional risk management
processes, are likely to fail the challenge of the Act. We conclude by
practically demonstrating how R2A can help you in this process.
Over the years, R2A has legally tested this Safety Case approach regularly.
We recommend that readers do so with their own legal counsel prior to
adopting this approach.
SAFETY DUE DILIGENCE Recognised Good Practice Whitepaper 8DUE DILIGENCE ENGINEERS
Precaution Vs Hazard Based Approaches To Risk Management
DUE DILIGENCE BASED SFAIRP HAZARD BASED ALARP
Precaution focused by testing all practicable precautions for reasonableness,thatis,onthebalanceofthesignificanceofthe risk vs. the effort required to reduce it.
Hazard focused by comparison to acceptable or tolerable target levels of risk5
Establish the ContextRisk assessment (precaution based):Identify credible, critical issuesIdentify precautionary optionsRisk-effort balance evaluationRisk action (treatment)
Establish the ContextRisk assessment (hazard based):(Hazard)riskidentification(Hazard) risk analysis(Hazard) risk evaluationRisk treatment
Criticality DrivenUsual interpretation of WHS Act & common law.
Risk (Likelihood And Consequence) DrivenUsual interpretation of AS/NZS ISO 31000
The overall situation is perhaps best summarised by Chief Justice Gibbs4 of
the High Court of Australia:
Where it is possible to guard against a foreseeable risk, which, though
perhaps not great, nevertheless cannot be called remote or fanciful, by
adopting a means, which involves little difficulty or expense, the failure to
adopt such means will in general be negligent.
That is, it does not matter how low the risk estimate is, if more can be done
for very little effort, then the failure to do so will be negligent, in the event
of an incident.
Thisleadstothefourthconcern;thatthetemptationistoimplement
a precaution that reaches the target risk threshold without formally
considering the hierarchy of controls.
This shift from a hazard based risk assessment approach (which appears
to be encouraged by the risk management standard ISO 31000) to the
precautionary due diligence approach (encouraged by the common law and
now the model WHS act), is summarised in the table below.
4 Turner v. The State of South Australia (1982) High Court of Australia before Gibbs CJ, Murphy, Brennan, Deane and Dawson JJ). 5 FromthedefinitioninAS/NZSISO31000:2.24riskevaluationprocessofcomparingtheresultsofriskanalysis(2.21)withriskcriteria(2.22)todeterminewhethertherisk(2.1) and/or its magnitude is acceptable or tolerable.”
SAFETY DUE DILIGENCE Recognised Good Practice Whitepaper 6DUE DILIGENCE ENGINEERS
Risk Management of downside (negative or pure) risk
Hazard identification(Foreseeability)
Implementationof reasonably practicable
precautions
PreventabilityIdentify all practicable
precautions for each critical hazard following the hierarchy
of controls
Reasonableness Determine which practicable precautions are reasonable
based on the High Court established balance (disproportionality)
Hazard analysis and risk calculationprocess to determine the nature of risk
and the level of risk(inherently unrepeatable)
Compare against criteriaprocess of comparing the results of risk
analysis with risk criteria to determine whether the risk and/or its magnitude is acceptable
(may eliminate further consideration of acceptable or tolerable risks)
Selected risk criteriaterms of reference against which the
significance of a risk is evaluated (inherently subjective)
Risk mitigation and management optionsprocess to modify risk.
(may not follow the hierarchy of controls)
Monitoring and Review(Quality assurance)
Due Diligence
Common law approach(precaution based and criticality driven)
Target risk approach(hazard based and risk driven)
SFAIRP ALARP
CriticalityEstablish critical
hazards
SFAIRP and ALARP – Are Not the Same.
The diagram2 below describes the two approaches in a different way.
The left hand side of the loop describes the legal approach which results
in risk being eliminated or minimised so far as is reasonably practicable
(SFAIRP) as described in the model WHS legislation.
2 Robinson Richard M, Gaye E Francis, Peter Hurley et al (2013). Risk and Reliability: Engineering Due Diligence (9th Edition). R2A Pty Ltd. Page 167.
WHY YOUR CURRENT OH&S SYSTEM PROBABLY WON’T COMPLY
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OPERATIONS DUE DILIGENCE Best Practice Whitepaper 1DUE DILIGENCE ENGINEERS
PROJECT DUE DILIGENCEBEST PRACTICE.How to Deliver a Project on Time and to Budget.
OPERATIONS DUE DILIGENCE Best Practice Whitepaper 10DUE DILIGENCE ENGINEERS
successful projects: what they look like
The success of projects in terms of both performance and project
delivery requires project due diligence. The due diligence aspect
arises from confirming the ultimate objectives (the critical success
factors) of the fully functioning outcomes for all stakeholders rather
than just delivery to a project specification.
The project development risk profile outlined above can also be
represented by the diagram below.
+++ - +
- -
- -
- - -
Likelihood
Unviable Ugly Bad Good
-
- -
- -
- - -
Vulnerabilities
Likelihood
Disaster Ugly Bad Good
- + + +
- - + + +++
- -
- - -
Value Addeds
ConsequencesUnviable Ugly Bad Good Outstanding Brilliant
- - - +++
- - -
Consequences Consequences
VulnerabilitiesVulnerabilities
Value Addeds
Likelihood
Concept risk profile Tender risk profile Commissioned risk profile
OPERATIONS DUE DILIGENCE Best Practice Whitepaper 6DUE DILIGENCE ENGINEERS
BOTTOM UP SILOS FAILURES
Another common cause of ineffective project risk management
is that each discipline / project group undertakes risk assessment
activities in their own silos without regard for the high level
project objectives. Each specialist group comes to an internalised
understanding of what is important. Senior management therefore
receive pieces of the puzzle but not within a unified framework.
So what are the key risk issues that the project needs to worry about?
Common mode and common cause issues can also be overlooked
using a bottom up silo approach.
OPERATIONS DUE DILIGENCE Best Practice Whitepaper 3DUE DILIGENCE ENGINEERS
executive SUMMARY
The success of delivering large infrastructure projects requires project due diligence.
The delivery of large infrastructure projects and the procurement of appropriate,
fit for purpose rolling stock in a timely and cost effective manner is critical to
Australia’s continuing growth.
One of the common problems associated with project risk is that specialist groups
within an organisation operate in silos and senior management are left to
put together the pieces of the puzzle.
For projects to be successful in terms of both performance and project delivery
requires project due diligence.
This paper highlights the R2A model which can deliver large infrastructure
projects on time and to budget.
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OPERATIONS DUE DILIGENCE Best Practice Whitepaper 1DUE DILIGENCE ENGINEERS
OPERATIONS DUE DILIGENCEBEST PRACTICE MODEL.How to Make Your Operations the Best They Can Be.
OPERATIONS DUE DILIGENCE Best Practice Whitepaper 2DUE DILIGENCE ENGINEERS
CONTENTS
EXECUTIVE SUMMARY 3
INTRODUCTION 4
SECTION ONE THe liMiTaTiOns Of COnvenTiOnal reliaBiliTY analYsis 6
SECTION TWO
BOTTOM-up silOs Miss COMMOn MOde failures 7
SECTION ThREE
BOTTOM-up analYsis Cause & effeCT diffiCulT TO see 8
SECTION fOUR
HOw r2a Can Help 9
SECTION fIVE
THe prOCess 10
CONCLUSION 14
WhERE TO NEXT 15
OPERATIONS DUE DILIGENCE Best Practice Whitepaper 4DUE DILIGENCE ENGINEERS
Transparency in decision-making in complex technological enterprises is often
difficult. Requests for greater system, plant or network reliability is often seen as
‘gold plating’ by financial markets and shareholders, and yet the failure to have
sufficient redundancy can result in the catastrophic loss of shareholder funds and
community devastation.
The sorts of questions often asked of R2A include:
1. we know that there are off-site issues that can seriously affect our product
delivery processes.
2. we do not have direct control over these off-site resources. How can we
communicate our concerns to those responsible in a way that motivates action?
3. Our engineers have recommended new plant upgrades. we recognise that
their arguments are based on good engineering practice but we can’t see a
robust connection to future profitability. How can these recommendations be
transparently assessed?
4. How do we include off-site threats in a meaningful way in our overall plant
availability model?
5. we have had reliability studies completed on our plant. But there are some
credible, critical issues that are considered to be so unlikely they don’t seem to
rate any attention. we know that if one happens, the business will be critically
exposed. How do we demonstrate the importance of these to the board in a
constructive way?
6. we have spent a great deal of time and effort on reliability studies. But we
don’t feel they are contextually sound and have no process to test this. is there
a way this can be addressed?
The R2A top-down Operations Due Diligence process specifically addresses these
questions and enables a persuasive argument to be presented for proposed
upgrades. it also ensures that the outcomes are aligned with the values and goals
of the organisation.
INTRODUCTION
TIPstarting with the right questions will enable the preparation of a comprehensive proposal.
OPERATIONS DUE DILIGENCE Best Practice Whitepaper 9DUE DILIGENCE ENGINEERS
the process
3. functional Availability Modelling
The key concept here is to divide the system or process under
consideration into sub-systems that are independent of each other
and that all the interested parties can picture and agree represents the
system as a whole. Block diagrams are a simple way of representing
complex systems diagrammatically and can be used for both risk and
availability studies.
Care must be taken when constructing models, as physical layout may not
represent the functional arrangement. for instance, if two power feeds are
physically in parallel but, alone, neither can supply enough power for the
process, they are functionally in series. Critical process components show
up as bottlenecks in the block diagram, as do any common mode failures
identified in the previous step.
The figure below describes the integration of the first three steps of the process.
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